Are there 'shovel-ready projects?' An interview with Jared Bernstein.

In his interview with Peter Baker, President Obama said "there’s no such thing as shovel-ready projects.” Apparently, he said much the same to David Brooks earlier in the year. On Monday, I called the White House to ask what, exactly, he meant. I didn't get transferred to the president. But I did speak with Jared Bernstein, chief economist and economic policy adviser to Vice President Biden, and one of the members of the economic team who's worked most intently on the stimulus. A lightly edited transcript of our conversation follows.

Ezra Klein: The president has now told at least two journalists that "there’s no such thing as shovel-ready projects.” He obviously believes it. But what, exactly, does he mean?

Jared Bernstein: The president definitely had some initial frustration that projects were taking longer to get up and running than he wanted. About 100 days into the stimulus, the president and the vice president spoke to the agencies about speeding things up and laid out ambitious targets. And ultimately, they met and exceeded every one of those targets. The fact is that there are more than 75,000 infrastructure projects up and running today and creating jobs.

EK: What were the targets? How did the White House judge whether the stimulus was working?

JB: The most salient target was to spend 70 percent by September 30th, 2010. And we hit that target. We expected to have saved or created around 3.5 million jobs by this point, and according to the estimates of outside evaluators like the Congressional Budget Office, we hit that target, too. If you want more targets, read the report from the vice president that we released last week. It lists more of the specific goals the president set at that 100-day mark, like seeing 100 airports being improved, 1,500 highways being improved, 360 military facilities being repaired, and many more, by September 2009. And the agencies met or exceeded every one of those goals.

EK: You said you've spent about 70 percent of the money in the first two years. Where's the other 30 percent?

JB: The rest of that money is obligated, meaning that it's supporting projects that are under contract but are not yet completed. The way the spending works is that we don't provide the final check until the project is done. Just like if you pay someone to add on to your house, you make some initial payments, but you don't let go of all the money until the project is done. So the majority of that 30 percent are payments to come for projects that aren't finished. Then there are some tax receipts that are slotted to pay out over the next few months and things like Medicaid and food assistance.

EK: None of this really explains Obama's disappointment with shovel-ready projects. You're saying the work fulfilled expectations. He keeps telling reporters that it didn't.

JB: Very early on in the Recovery Act, the VP went to visit this bridge in Pennsylvania that was a good candidate for repair. He asked “how shovel-ready is it?” It happened that the engineer was there and said, “hold on, I’ve got the blueprints right over here in my car.” He actually got them and showed them to the VP.

They quickly got a transportation grant to fix the bridge but didn’t start construction for a few months because the local government didn’t want to have to divert traffic patterns until the summer. Now the project is completed. That’s just the way these things unfold sometimes. There’s often going to be some wiggle between approval and shovels in the ground. The point is there are now tens of thousands of projects creating good jobs and we should build on that momentum.

EK: The White House is asking Congress to put in a lot more money for infrastructure repair. But a lot of my readers are skeptical. We've spent more than $100 billion, we've started more than 75,000 projects, we're skeptical that this spending can come online as quickly as we'd like to see it move. Is there really more to do, and can it be done in an effective manner?

JB: This isn't hard to conceive of once you spend some time in this world: One program I liked in the Recovery Act was the 48C tax credit to incentivize the production of clean energy manufacturing products here in the United States. Thanks to this program, we've broken ground on nine new advanced-battery factories, and we think we can double that in the next few years and give the U.S. a global footprint in that industry. The smart grid program installed more than two million smart meters. There's just so much to be done in the infrastructure space, whether that's repairing our infrastructure or building out things like smart-grid systems and high-speed rail.

State transportation departments have in house engineers and planners and can generally be counted on to produce shovel ready projects.

Not so other state and local departments that rely on issuing bonds to fund their infrastructure projects. Drawing detailed plans and specs (shovel ready) requires the expenditure of a significant amount of funds to hire architects and engineers and go out for bid. This money doesn't come from operating budgets, it comes from the proceeds of bond sales. Bond issues are approved by voters on the basis of a concept and seat of the pants estimates, and only after the voters approve and the bonds are sold is the money spent to get the project to a shovel ready state.

So, basically, any truly shovel ready project has already received funding through the issuance of municipal bonds. And those that aren't shovel ready often aren't because the local politicians can't sell them to their voters. So, our genius administration and Congress, no member of which was probably ever involved in getting an infrastructure off the ground at the state and local level, shovelled money out willy nilly to unprepared local bureaucrats for stuff that wasn't well planned and often not needed or wanted.

Instead of a focused national effort to use the money to achieve something of lasting value like the interstate highway system our parents and grandparents produced, the stimulus was blown on a hodge podge of bridges to nowhere and windows on empty buildings.

Obama, Pelosi, Reid, and the rest of the Democrats have been trying to buy votes with reckless spending. Do the math. The next generation will have to live with an unbearable tax burden to pay for the reckless spending of Obama, Pelosi, Reid, and the rest of the Democrats.

"Shovel ready" project only create jobs during the project. Low taxes encourage jobs and investment now and in the future. Entitlements give people incentives NOT to work and achieve.

If you want more jobs and a higher standard of living vote for less government, less spending, and lower taxes. Hint: that is not what you get with Obama, Pelosi, Reid, and the rest of the Democrats.

The short-sightedness and inherent imbecility of those who oppose efforts to invest in repairing the nation's decaying infrastructure and to equip the nation to better compete in the 21st century world is absolutely appalling. Conservatives continue to demonstrate their lack of both common sense and civic concern as the Reactionary Right continues its drift into loony-land.

The fact is that most of the stimulus money was spent on state operating budgets, not projects on any kind. The 75,000 figure is pure myth. What has occured is that states have made long term commitments to projects and spent a little seed money to get them into print. Then they took all the rest of the moeny and spent it on things like pension fund payments and salaries. This way they can say they met the goal, and at the same time saved the state from banruptcy.

It's about the same as claiming that there is a Social Security Trust Fund. What you have is an acknowledged long term committment but no obligation to actually spend the money on it today.

Here's why that's good and bad. It's no myth that a lot of jobs were saved by the stimulus. Far more states than will publicly acknowledge it are on the edge of bankruptcy. In many of these states, state workers jobs like teaching etc. were saved.

Here's why it's bad, or at least not so good. The projects that we discuss in theory, the infrastructure stuff, much of which didn't happen, creates more ancillary jobs than government jobs. Most of these companies have tons of subs working for them, that only hire when the time comes to start the job. This has a ripple effect that works it's way through the economy, in a way that saving jobs does not.

If you are REALLY interested in how state money is actually spent, you have to look up their CAFR, which is often wildly different than their stated budget. That's how you find out where the money was really spent.

This is really "inside baseball" though, and there is no way that Ezra (forgive me) would understand it. he goes to governmental and collegiate ecnomists and accepts their words at face value.

Correct me if I'm wrong though, but I have never seen Ezra quote from an economist who actually has skin in the game so to speak. That would be someone who works for a major financial firm and who loses their company millions and billions of money if they're wrong. Ezra, I apologize in advance if you have previously interviwed such people in your column and I missed it.

Ironic that EK would have to talk with Bernstein, who was the other half of Christina Romer's totally incorrect forecasting at the start of the administration. I wonder when he will follow her and jump, or get pushed, into a faculty position at a prestigous university. Being an ecnomist for a government or university means never having to say you're sorry!

"The short-sightedness and inherent imbecility of those who oppose efforts to invest in repairing the nation's decaying infrastructure and to equip the nation to better compete in the 21st century world is absolutely appalling."

OHIOCITIZEN,

The government at all levels spent about $6.4 trillion in FY2010. That infrastructure wasn't (and hasn't been) properly funded is lamentable but utterly unsurprising.

These days, politicians (on both sides of the aisle) generally prefer transfer payments to investment.

We don't oppose investing in infrastructure per se, we oppose putting ever more dollars into the thieving politicians' basket and hoping that this time the money will be well spent.

"Conservatives continue to demonstrate their lack of both common sense and civic concern as the Reactionary Right continues its drift into loony-land."

Lack of common sense?

The government at all levels spent $43.8 trillion from 2000-2009 and your priorities somehow couldn't find funding.

Now, they tell us, just cough up another $50 billion and all will be wonderful in infrastructure land.

Something like $100 billion was already allocated by ARRA.

Can you name anything of consequence the government did with infrastructure in your area?

Where I live, they repaved roads which weren't in bad shape to begin with, with the unhappy consequence of extra traffic.

Here is another example - documented with photographs - from California:

"However, no lasting jobs were created, and no net business will be generated as a result of any of these kinds of stimulus efforts. If improvements in one place do cause increased overall traffic, it will simply be at the expense of some other business somewhere else."

At best, stimulus creates a bit of short term work which then fades with the stimulus. We are left with no extra wealth, debt, and the jobs are gone.

At worst, the stimulus dollars directly reduce spending elsewhere and the only difference the stimulus made was to reduce our wealth (by spending it on projects of lower value).

If you are wondering why infrastructure is still crumbling, it's because government thought it best to put windows on abandoned buildings, repave perfectly fine roads and sidewalks, make a lot of transfer payments and artificially inflate state and local government worker compensation and/or payrolls - and not to fix what you consider to be infrastructure problems.

And common sense suggests signing on to another $50 billion (or more) for these clowns to waste?

Feel free to use your own money to pay people to do worthless things, but please don't force me to contribute.

Jared Bernstein is a bureaucratic hack, but he let's the cat out of the bag early with Klein:

"The most salient target was to spend 70 percent by September 30th, 2010. And we hit that target."

"Success" in the behemoth is always ascribed to most basic and irrelevant accomplishments. Anyone can give away vast sums of money (especially if one doesn't first have to acquire it by legitimate means), but only stupid government bureaucrats trumpet the endeavor as though it takes skill. It was the same way with Cash for Clunkers. The program was a disaster on multiple levels, but Obama and our girl Klein trumpeted it as a major "success" for the sole reason that it quickly blew threw about four billion of other people's money, offered up the generous and doting government. "Success" was likewise trumpeted over the fact that RomneyCare in Massachusetts coerced, under threat of various penalties stipulated in law, a substantial portion of the population into actually following the law. Never mind that health care there has deteriorated and become more expensive than it otherwise would have, but, "We threatened people with the law and they complied. Success!"

And here's Klein and Bernstein, again, with more hare-brained projects they can throw around under force of law, and make other people pay for, behind threats of impoverishment or incarceration, all the while screaming "Success" as though their having to initiate force in all their proceedings isn't the very indication of Failure.

If there were awards for being obsequious, Ezra would have a wall full of them...

Ezra managed to construct an article defending the success of the stimulus over his master's no-shovel-ready-jobs-mea-culpa by asking some Biden hack staged "questions" that are "answered" with statements intended to say that there really were the "equivalent" of shovel-ready jobs and that the program as a result was a success without ever tarnishing Obama or raising any comment that touched on Obama's feckless excuse that (the stimulus hadn't succeeded because) he had been lied to about there being shovel-ready jobs... That accomplishment is both astounding and entertaining, Ezra.

Long after Obama has walked the lank, ardent progressive supporters, like Ezra, will still be advocating and promoting ideas that the American people will have rejected once and for all. He and his coterie of journolist-progressives will sit there and howl at the wind as the people's representatives dismantle not just the past 2 years fiascos, but those mistakes made over the past 50 years of creeping socialism. Have fun, boys...

If there were awards for being obsequious, Ezra would have a wall full of them...

Ezra managed to construct an article defending the success of the stimulus over his master's no-shovel-ready-jobs-mea-culpa by asking some Biden hack staged "questions" that are "answered" with statements intended to say that there really were the "equivalent" of shovel-ready jobs and that the program as a result was a success without ever tarnishing Obama or raising any comment that touched on Obama's feckless excuse that (the stimulus hadn't succeeded because) he had been lied to about there being shovel-ready jobs... That accomplishment is both astounding and entertaining, Ezra.

Long after Obama has walked the plank, ardent progressive supporters, like Ezra, will still be advocating and promoting ideas that the American people will have rejected once and for all. He and his coterie of journolist-progressives will sit there and howl at the wind as the people's representatives dismantle not just the past 2 years fiascos, but those mistakes made over the past 50 years of creeping socialism. Have fun, boys...

Blackouts are up 400% in recent years, and the population is set to grow by almost 50% by mid century. Lots of investors would love to break ground with new power plants, but years of litigation and red tape await. Even on their own projects, the left's own rules tie them up and prevent progress.

Out here in the real world of contractors and local government we all knew that "shovel ready" was a crock, but we hoped the Feds were stupid enough to give us the money anyway. Thanks alot suckers!

Here is the funny part...the reason no projects are shovel ready is...the federal and state bureaucracy! All the rules and regulations, the permits and hearings, grind everything to a crawl. You can't even start permitting a project unless all the drawings are complete, all the public meetings are held. You'd better have all your money lined up well before then.

Want REAL shovel ready prjects? Declare a 3 year hiatus of NEPA and the endangered species act and then stand back. You'd be amazed at the mega projects that would start up, overnight. Better still, it would be private money being spent, not goverment money.

It is really hard to get excited over fixing potholes. I think when people were told about shovel ready projects, they thought of projects like Hoover Dam. Where are these kinds of projects now? People like to see where there money is going and that the government is doing something - big, visible projects help do these things.

Mainstreet is basically considered chattel by all sides of this corrupt system. The comments on this post are just two cents into the wind. The currency generated was never meant to do anything but make the powerful more powerful. This Government [For 100 years] and the Banks on Wallstreet are committing the crime of humanity and that includes all atrocities. When we are all aware of the depression and the crushing debt-slavery to come, will we fight then?

Environmental and other bureaucrats tie projects up with endless and worthless reviews. Public construction agencies are largely immune from accountability for cost, schedule, or quality. They tie contractors up with niggling, made-up "code" requirements and environmental regs. Any project with Federal money has Davis-Bacon wage rules that force non-union contractors out of bidding. "Shovel-ready" is what you need to be if you are listening to Obama or Pelosi talking about the 'stimulus', which did nothing but add more bureaucrats.

Bernstein must be dizzy after that spin -- 75,000 infrastructure projects...well, let's see 100 airports, 1,500 roads, 360 military bases...what did they do buy 70,000 laptops and consider that new infrastructure?

Obama's whining about no shovel ready projects is acknowledging reality: Keynes wrote his theories for a different age. Today is materially different -- improved engineering standards and the growth of regulations mean we can no longer act quickly enough to borrow and spend money on efficiency-improving infrastructure fast enough to make a meaningful difference in economic downturns.

Counter-cyclical spending on a national scale is no longer possible in a modern economy. The cycles end before the bureaucrats can finish signing their forms.

Shovel ready projects are the projects no local, state, or federal program was willing to fund before the stimulus. Imagine the quality of these boondoggles. Millions of bureaucrats with trillions at their disposal couldn't justify these lemons until the stimulus came along.

Perhaps if the full $800bilion had gone for infrastructure as Obama had promised in his campaign and implied in trying to sell the stimulus, it might have worked. As it is those 3.5 million jobs come to about 100k each. Since only 9% was spent on infrastructure, the other money was a give away to state union for the backing they showed Obama. Add to it the UAW bailout which ignored the rights of stock and bondholders and you have a great big giveaway program to unions. It was a lie by the administration, the unmployment rate will not go over 8% lie, that sold the stimulus. Then Obama sells the 25 billion bailout of teachers, with some of it funded with food stamp money. Estimate is 1 to 1 1/2% of that money went directly to the union dues and then to the Democrat campaign coffers. Guess the Dems needed it more than the poor. But the stimulus didn't live up to expectations, because states did not have to make adjustments to their budgets and now they are faced with increasing deficits and cuts which could have been planned for a lot better without the false hope of bailouts. Add to the onerous legislation passed that make the future for businesses uncertain and you have business not expanding. WHy should they when they can't even tell what next years costs are going to be to keep an employee. Making business the bad guy was a mistake the Dems are paying for now.

As noted in the massive analysis project by the WSJ, only about 8% of the "stimulus" passes the smell test of actually stimulating anything other than left wing votes.

Of the actual 8%: Requirement number one is that all jobs "created" must be union jobs. That particular alone comes with a 40-50% devaluation of funds. So where is the money? The administration is obviously hard at work hiding what the other 92% of the funds are being used for.

I'm sure as soon as the funds are washed thru an assundry of federal agencies, the adminstration will "come clean" and present an accounting as bogus as obama's birth certificate.

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